Potential Sources of Retirement Income

Potential Sources of Retirement Income and Tips to Use Them

My job over many years has changed as the Reverse Mortgage (HECM) has evolved. Now I am more of a small part older Americans longevity and retirement resources strategy.

Investing in multiple sources of retirement income while working allows you to create significant savings and a steady flow of money you can rely on once you have retired. Identifying and sorting through sources of retirement income can however be a problem, when you have several to choose from and do not know what makes one better than the other. This is where doing research on the Internet and reading relevant articles come in handy, and in addition we are here to guide you through the process of finding the best sources of retirement income.

Retirement Does Not Mean That You Need To Stop Working. Most people believe that once they retire, income from a job completely disappears, however in many cases this is not true as many continue to work. In fact many retirees choose to work either full-time or part-time in order to supplement their pension they are getting during retirement. Others just choose to keep working because they just want to remain fit and healthy and feel that they have a lot to contribute to the professional world. Many have to keep working, because they do not have a good source of retirement income due to inadequate planning or their pension is quite small.

Many retirees have skills that are useful for businesses and entrepreneurs. So it is not surprising that some set up businesses of their own once they retire. Owning part of a business, allows for retirees to use their skills and experience to bring in more customers while not having to work throughout the day. Retirees most often however choose to create a small business in an industry they have worked in, as this is a safe choice.

Social Security Payments. Especially among Americans and others who have access to Social Security, it continues to constitute about 30 percent of retirement income. Experts estimate that this percentage will increase over the years as investments in other sectors do not perform well. Those who are classified in the baby boomers age frame and will hit 65 years in the next decade are going to increasingly rely on Social Security and so it is important that people understand what benefits they can get. When it comes to claiming social Security it is better to wait rather than availing 100 percent of it once it is available. Waiting for several years before claiming social security, results in benefits growing by 8 percent per year. As a result many in the United States prefer to wait and claim social security benefits before the age of 70, which is the cut off age when benefits stop growing every year.

Reverse Mortgages or Moving To Smaller Home. Dipping into equity in a home is another way to meet retirement expenses and is a popular option among people who have paid off most of their mortgage or own their residence outright. Taking a reverse mortgage allows people to continue living in their home for the rest of their life. They can then opt to receive the reverse mortgage payments as monthly installments or a line of credit. Some retirees even move into a smaller home or rent, after selling a bigger home and use the money to finance their retirement.

401(k) or Similar Accounts. Among Americans contributing to a 401(k) account is a major way of saving money for retirement and the similar offerings are available in other countries. As part of the 401(k) account which is normally run by the company that a person works for, up to $18,500 can be saved per year if the person is under the age of 50. People who are over the age of 50 can save more and the amount permitted in 2018 is $24,500 a year. Saving in the 401(k) account also gives people some tax benefits and companies even contribute a portion, which in some cases can be about 50 percent of what the employee puts in. However, in spite of saving a large chunk of money per year in such accounts it is recommended that they should not be relied on completely when planning for your retirement. The risk involved in such accounts is that, in cases of bankruptcies or closures people who own stock in a company through their 401(k) will find that their investments are of no value. So it is essential that people who are opting for a 401(k) account decide where to invest the money saved.

Opting for Annuities. Buying an annuity is what many people who are about to retire do. After making an investment people can opt to receive annuity payments immediately. A deferred annuity results in the initial amount being invested and payments being provided once you have retired. Usually there are hundreds of annuities available for people who are about to retire or who are still going to be working for a few years. Financial advisors can help you find a good annuity offered by an insurance company or another institution and ensure that you do not make a bad choice.

Pensions. Employees can also avail of pension when they retire and have been working in companies for several years. However, pension payments can be quite small if you have only worked for a company for a few years so you should ideally be looking to cultivate several sources of retirement income when working.

Stocks. Investing in stocks is another sound option when planning for your retirement. However you need to invest in stocks that are safe and increase in value over the years. Since all stocks do not go up in value, you will need to keep an eye on prices, sell ones that are under performing and reinvest your money.

Whether you plan to write a book and use the royalties after you retire or rent out a property or home, you need to make a plan when you are part of the workforce and invest in several sources of retirement income. Additionally since all sources of retirement income are not 100 percent safe you need to spread your investments around to ensure their safety.

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**The owner(s) retain title to the property that is the subject of the reverse mortgage until the person sells or transfers the property and is therefore responsible for paying property taxes, insurance, maintenance and related taxes. Failing to pay these amounts or failure to maintain the condition of your property may cause the reverse mortgage to become due immediately. A reverse mortgage is a complex loan secured by your home. Whether such mortgage makes sense for you depends on your financial situation and needs. For these reasons, you are required to consult with a qualified independent housing counselor and include family members and other trusted advisers before making this decision. This information is not from HUD or FHA and was not approved by HUD or any government agency.